IRDAI SURVEYOR S01
PRACTICE EXAM INDIA 100
QUESTIONS
Question 1: Which situation is the best example of a pure risk from an insurance perspective?
Choices:
1) A shop may su�er �re damage 2) A trader may pro�t or lose from commodity speculation 3) An investor may gain from rising share prices 4) A manufacturer may pro�t from a new product launch
Correct Answer: A shop may su�er �re damage
Explanation: Pure risk involves the possibility of loss or no loss, but no prospect of gain. Fire damage is a classic pure risk, while speculation and investment involve both gain and loss possibilities.Page 1
Question 2: An insurer relies on a large number of similar exposure units primarily because this improves its ability to do what?
Choices:
1) Eliminate all individual losses 2) Predict aggregate loss experience more reliably 3) Guarantee that every policyholder has a claim 4) Remove the need for underwriting
Correct Answer: Predict aggregate loss experience more reliably
Explanation: The law of large numbers makes aggregate loss experience more predictable as the number of reasonably similar exposure units increases. It does not eliminate losses or underwriting.Question 3: A factory installs an automatic sprinkler system to reduce the severity of a possible �re. This action is best classi�ed as what?
Choices:
1) Risk retention 2) Loss control 3) Risk transfer 4) Speculative risk creation
Correct Answer: Loss control
Explanation: Installing sprinklers is a loss-control measure because it is intended to reduce the frequency or severity of loss. Insurance itself is a common risk-transfer mechanism.Page 2
Question 4: Which characteristic most strongly supports the insurability of a risk?
Choices:
1) The loss is deliberately caused by the insured 2) The possible loss can be reasonably measured in �nancial terms 3) The event is certain to occur during the policy period 4) The exposure guarantees a pro�t to the policyholder Correct Answer: The possible loss can be reasonably measured in �nancial terms Explanation: An insurable risk should generally involve a fortuitous loss that can be measured or estimated �nancially. Deliberate, certain, or pro�t-seeking events do not �t the normal concept of insurable pure risk.Question 5: If historical data show that 2 out of every 1,000 similar warehouses su�er a covered major �re each year, the �gure 0.002 is primarily an estimate of what?
Choices:
1) Loss severity 2) Probability of occurrence 3) Policy excess 4) Salvage value
Correct Answer: Probability of occurrence
Explanation: Two losses per 1,000 exposure units corresponds to an estimated annual frequency or probability of = 0.002. Severity concerns the size of loss, not how often it occurs.Page 3